To start the statute of limitations running on the excise tax that arises with an excess contribution to a qualified retirement account, it is imperative that a Form 5329 be filed for the tax year in question. Even if the statute of limitations runs on the individual’s Form 1040 income tax return, that will not prevent the IRS from pursuing the excise tax for an excess contribution to a retirement account if no separate Form 5329 is not filed.

Each year the IRS and the Department of Treasury publish what they call their ‘Priority Guidance Plan’ (the Plan) for the next 12 months. The most recent Plan was published in Notice 2022-21 (November 4, 2022) for the period that runs from July 1, 2022 to June 30, 2023. There are over 205 guidance projects in the Plan. Some of the guidance projects that relate to estate and retirement planning are summarized below.

There is a noticeable trend in the U.S. Tax Court of the IRS successfully challenging claimed charitable income tax deductions due to the donor’s failure to substantiate the deduction in accordance with the IRS’s stated instructions. These are cases where a ‘substantial compliance’ with the rules is not enough to preserve a charitable income tax deduction.

A trust owned 529 account can provide great flexibility while sheltering an irrevocable trust from high federal income tax rates. One of the problems with an irrevocable trust, and especially a dynasty-type irrevocable trust, is the high taxes that must be paid on the trust’s accumulated income. Obvious tax benefits can be achieved if the trustee has the authority to invest trust funds in a 529 account.

While a qualified charitable distribution (QCD) is made directly by the IRA custodian to the designated charity, a contemporaneous written acknowledgement (CWA) is still required from the charity for the QCD to be recognized for tax reporting purposes.

The failure to follow highly technical rules will cause a donor to lose a charitable income tax deduction. It seems that these rules are traps where the IRS tends to say ‘gotcha.’

It may make sense to opt out of the automatic GST exemption allocation for gifts that were made in 2021 in light of 2022’s market ‘meltdown’ for gifts that are soon to be reported on an extended federal gift tax return on October 17, 2022.

The federal government’s ability to seize a passport for the failure to report a foreign bank account was recently upheld by a Federal Appeals Court.

We often address the implications of a beneficiary designation in estate planning, e.g. IRAs; life insurance; transfer-on-death (TODs.) Yet another contract that can conflict with testamentary intent expressed in a Will or Trust is a provision in a limited liability operating agreement or partnership agreement that can interfere with, or frustrate,  a decedent’s testamentary intent. It is clear that a Will does not control the disposition of nonprobate assets. In re Estate of Maxwell, No 294357, Michigan Court of Appeals, November 9, 2010. Less certain is when the nonprobate ‘contract’ is not clear vis-à-vis the terms of a Will, or the implications of a specific devise.

While the concept of the clawback of lifetime gifts made by a donor to calculate the donor’s federal estate tax liability is already complicated, the IRS just made the calculation of that phantom federal estate tax liability even more complicated with its new includible exception Regulations.